ISR News Releases – University of Michigan Institute for Social Researchhttp://home.isr.umich.edu
Social Science in the Public InterestWed, 23 May 2018 19:37:40 +0000en-UShourly1https://wordpress.org/?v=4.5.3Redistribution of wealth could boost consumption ratehttp://home.isr.umich.edu/releases/redistribution-wealth-boost-consumption-rate/
Wed, 23 May 2018 19:37:40 +0000http://home.isr.umich.edu/?post_type=isr_news_releases&p=13810

Photo credit: moodboard/Thinkstock

ANN ARBOR—Want to boost the consumption rate in the United States? Transfer wealth from the top 20 percent of earners to the bottom 80 percent, according to a University of Michigan study.

The study is the first to consider the interplay between consumption, income inequality and wealth inequality, and found that such a transfer could boost the total consumption rate by about 3 or 4 percent.

Previously, studies had considered the effect of income on consumption, which is the measure of the goods and services you buy daily, including what you pay for your car or bus pass, groceries, clothing and health care. But it’s important to also take into account wealth, which are the savings and other assets a person might own and resources that person might draw on if he or she falls upon hard times.

“In economics, there’s this theory that people tend to smooth their consumption,” said U-M researcher and study author David Johnson. “Even if your income goes up or down, you’re going to spend at a certain rate, saving for a rainy day, and if that rainy day comes, use those funds. … The goal of our paper is to simulate how you respond to your income going up or going down.”

What Johnson and colleagues found is that less wealthy people had a higher marginal propensity to consume, while wealthier people had a lower consumption rate.

Wealthier people spent more money as a whole, but had a lower rate of consumption: everyday requirements such as groceries take up a smaller percentage of their budgets. Also, they have deeper pockets to dip into if they have an unexpected bill to pay, which made them less reactive to changes in their income.

Less wealthy people had higher consumption rates, and they were less able to keep a stable consumption rate if their incomes changed, according to the researchers. Hurdles such as a broken-down car or health emergency aren’t as easy to pay because they don’t have the funds in savings, or have more difficulty applying for credits or loans to pay for the emergency.

Examining only the effect of income on consumption doesn’t take into account, for example, a retiree whose income might be low, but who might be drawing on retirement savings.

The study uses data from the Panel Study of Income Dynamics, which has traced the financial lives of the same families for 50 years. The PSID is housed within the Survey Research Center at the U-M Institute for Social Research.

“In order to really evaluate the rate of consumption, you have to look at income, consumption and wealth together,” said Johnson, who is the director of the PSID. “The Panel Study of Income Dynamics is the only dataset that has all three.”

The researchers also calculated what would happen if some wealth was shifted from the top 20 percent of wealthy people to the bottom 80 percent. They found that total consumption would increase by 3 to 4 percent.

“A redistribution of wealth might lead to higher growth, and growth is good,” Johnson said. “You’re still taking away from somebody, but overall, it’s better.”

The study is published as a working paper online at The Washington Center for Equitable Growth.

]]>Second Annual IRIS Data Release Now Availablehttp://home.isr.umich.edu/releases/second-annual-iris-data-release-now-available/
Mon, 21 May 2018 14:06:55 +0000http://home.isr.umich.edu/?post_type=isr_news_releases&p=13779ANN ARBOR—The Institute for Research on Innovation & Science (IRIS) is pleased to announce the second annual IRIS research data release is now available.

The IRIS dataset is a result of an unprecedented collaboration between the U.S. Census Bureau and more than thirty public and private universities. In 2015, the United States invested $214 in academic research for every man, woman, and child in the country. How the impacts of that investment can be traced through the economy is not always clear. Founded in 2015, the mission of IRIS is to support independent, frontier research on science and innovation in the service of the public interest. IRIS collects administrative data from top R&D performing universities and is working to develop a robust dataset through which one can explore, map and quantify how federal funding for research channeled through universities impacts the economy down to the local level. In addition to creating specialized reports for IRIS member universities, IRIS facilitates research by an expanding user base in fields including sociology, agriculture, economics, public administration, and business by making available an annual research data release.

Researchers have already used IRIS data to examine how federally funded research yields safer and more secure food systems, to measure gender differences in graduate studies and early career pathways within STEM fields, and to measure how university innovations contribute to regional economic growth. Since the first data release last year, the number of researchers has grown from the founding PIs and their research teams to more than 48 active users spanning 18 institutions.

The April 2018 data release includes transactions from about 300,000 unique awards including wage payments to 480,000 individuals as well as transactions to organizations and individuals for goods and services totaling $27.2 billion. With each new data release, IRIS adds new member university data, with the ultimate goal of engaging 150 universities that collectively account for over 93% of Federal Research & Development expenditures for academic research in the United States. Executive Director Jason Owen-Smith and his team at IRIS are excited to help find new stories the data has to tell, and encourage researchers to apply for access to the IRIS data by submitting a research proposal on the IRIS website: http://iris.isr.umich.edu/research-data/access/.

ANN ARBOR— Bryan Stuart, a recent Ph.D. in Economics and former Population Studies Center (PSC) trainee at the Institute for Social Research at the University of Michigan, received the PAA Dorothy S. Thomas Award on Friday, April 27, 2018 during the PAA Annual Meeting in Denver. Stuart is the fourth consecutive U-M economics Ph.D. and PSC trainee to win the award, following Eric Chyn (2017), Jason Kerwin (2016), and Olga Malkova (2015).

“We are very proud that a graduate of the University of Michigan’s economic demography training program, run jointly by ISR’s Population Studies Center and the Department of Economics, has won this distinguished award for each of the last four years,” says David Lam, ISR Director. “It is a great reflection on our students, on the dedicated faculty and staff involved in the program, and on the unique resources that our program provides for studying the relationship between economics and demography.”

“Bryan’s outstanding paper provides some of the most convincing evidence to date of the long-term negative consequences for education and income of being born during a recession,” says Lam. Stuart studied at PSC from 2012-2017 where his research interests included labor, public and urban economics, and economic history. His work examined the long-run effects of recessions on education and income, the role of birth town migration networks in historical U.S. mass migration episodes, and the role of social connectedness in reducing crime in U.S. cities.

“It’s a real honor to receive this award,” says Stuart. “I’m especially grateful to the faculty, staff and students at the University of Michigan and ISR for creating such a tremendous research environment.”

Stuart received his PhD in 2017 from U-M and his dissertation is entitled “’Essays on the Economics of People and Places.” Stuart’s dissertation committee included Martha J. Bailey (chair), John Bound, John DiNardo and Dominick Bartelme. Stuart also holds a master’s degree in economics from U-M and a bachelor’s degree from Indiana University. He currently works as an assistant professor at George Washington University, Department of Economics.

Contact: Catherine Allen-West, clawest@umich.edu

]]>Impact of tax reforms on confidence neutralized by tariffshttp://home.isr.umich.edu/releases/impact-tax-reforms-confidence-neutralized-tariffs/
Fri, 27 Apr 2018 17:44:02 +0000http://home.isr.umich.edu/?post_type=isr_news_releases&p=13738Although the Consumer Sentiment Index fell slightly in April, it has remained at very favorable levels since the start of 2018.

ANN ARBOR—Consumers remain confident that inflation and unemployment will remain low during the year ahead and wages will continue to slowly improve, according to the University of Michigan Surveys of Consumers.

The recent small variation in the Sentiment Index has been due to favorable impact from the tax reforms legislation, which is now being offset by unfavorable views of the proposed trade tariffs, said U-M economist Richard Curtin, director of the surveys.

“Perhaps the best single summary of the current state of confidence is that consumers believe the economy is now ‘as good as it gets,'” he said. “This view recognizes that the current expansion is approaching an all-time record length and the peak in economic conditions is near.”

Overall, the data are consistent with growth rate in personal consumption expenditures of 2.7 percent from mid-2018 to mid-2019.

“While consumers do not anticipate an economic downturn anytime soon, the long expansion has made consumers somewhat apprehensive about future trends,” Curtin said. “Consumers anticipate that higher interest rates will trim the future pace of growth and have become increasingly concerned about the negative impact from tariffs on trade.

“Moreover, there has been a growing gap in the past few years between how consumers judge future economic prospects and how they evaluate the current economy. When this gap grows to extreme levels, the divergence sparks a cyclical downturn. While the gap is not yet at such extremes, the divergence is large enough to spark growing apprehensions about the economy.”

Taxes and Tariffs
Tax reform and trade policies sparked many spontaneous comments, with a positive balance of opinion on the tax reforms and a negative balance of opinion on the trade tariffs. The difference in the Expectation Index was stark: positive views on tax reform had Index values 28 points higher than those who made no mention of the tax reform legislation, and negative views on tariffs had Index values that were 28 points lower than those who didn’t mention trade. As a result, trade policies neutralized the impact of tax reforms on consumer confidence.

Growth Slows but Economy Remains Strong
Fewer consumers anticipated that the pace of economic growth would increase during the year ahead, but half of all consumers still anticipate the continuation of good times in the economy as a whole. April’s survey found just 29 percent who expected an improving pace of growth, down from 42 percent last year.

Nonetheless, when asked about whether the economy would remain satisfactory, half reported that they expected good times to persist. Importantly, just one-in-four consumers expected any increase in unemployment from its current low rate.

Consumer Sentiment Index
The Consumer Sentiment Index was 98.8 in the April 2018 survey, between the 101.4 in March and last April’s 97.0. The Current Conditions Index was 114.9 in April, down
from 121.2 in March, returning to February’s level and just above last April’s 112.7. The Expectations Index was 88.4 in April, barely below March’s 88.8 and last year’s 87.0.

About the Surveys
The Surveys of Consumers is a rotating panel survey based on a nationally representative sample that gives each household in the coterminous U.S. an equal probability of being selected. Interviews are conducted throughout the month by telephone. The minimum monthly change required for significance at the 95-percent level in the Sentiment Index is 4.8 points; for Current and Expectations Index the minimum is 6 points.

The fellowship carries a $200,000 stipend, making it possible for recipients to devote up to two years to significant research and writing.

“I am thrilled and honored to receive the Andrew Carnegie Fellowship,” Ang said. “I’m especially grateful to Nancy Burns, chair of the political science department, for tirelessly pushing me not to give up on this project, which had been rejected several times.”

Ang’s project proposes to study economic development from an unconventional perspective: how new markets emerge in poor, weak states despite constraints or by turning constraints into strengths—rather than by first achieving good governance in first-world forms.

“More simply put, I want to unearth and tell stories of how people under adverse conditions creatively survive and even thrive,” Ang said. “There is a conspicuous lack of these stories in existing narratives and theories of global development. My project shifts the agency of poverty eradication from how the rich can save the poor to how the poor can and do, in many cases, save themselves.

“Winning this award gives me the necessary resources and recognition to execute this ​unconventional ​project.”​

Ang wrote “How China Escaped the Poverty Trap,” which won the 2017 Peter Katzenstein Book Prize and was named “Best Books of 2017” by Foreign Affairs. The fellowship will be used to conduct research on how markets emerge under adverse conditions in three low-income, weak countries: Nigeria, India and Afghanistan. The final product will be a book that reveals “unlikely successes” in the developing world.

U-M President Mark Schlissel said Ang’s research has led to innovative perspectives on complex global issues, including government, poverty and the relationship between democracy and development.

I​n his nomination letter, Schlissel noted that Ang’s first book is “bold (some say ‘audacious’), confident, and creative,” and that her Carnegie project will take the ideas she developed in ​that​ book from China to other parts of the world, enabling her “​to continue to change the field and the global policy discussion.”​

“Her ability to integrate big data in analyses of nonlinear, adaptive processes is challenging conventional wisdom and leading to remarkable new levels of understanding,” Schlissel said. “I am pleased to congratulate Dr. Ang on earning this prestigious Andrew Carnegie Fellowship. At U-M, we have been focusing on encouraging faculty engagement with the public, and I applaud her ongoing efforts to use her expertise to increase knowledge and awareness through op-eds published worldwide.”

Ken Kollman, director of the Center for Political Studies and professor of political science, said Ang is conducting novel research into the conditions shaping how societies develop from being poor to being middle income and even relatively wealthy on the world stage.

“She is building on her innovative work on corruption in the developing world,” Kollman said. “Her interests are in learning the combination of factors that lead to improved well-being for ordinary people as well as those that lead to stalemate, endemic corruption and no improvements in or worsening conditions for people. Her research has practical implications for decision-makers in many parts of the world.”

The Andrew Carnegie Fellows Program supports high-caliber scholarship and research that applies fresh perspectives from the humanities and social sciences to some of the most pressing issues of our times. The topics focus on a broad range of complex political, economic, technological, humanistic and sociological matters.

Jurors selected 31 fellows: 14 from public institutions, 15 from private institutions, and two are nonaffiliated writers.

The fellowship program was created in 2015 by Carnegie Corporation of New York, the philanthropic foundation established by Andrew Carnegie in 1911.

U-M researchers John Ciorciari, associate professor of public policy and director of the International Policy Center at the Ford School of Public Policy, and Arthur Lupia, professor of political science, earned fellowships in 2015.

This year, nominators submitted a total of 270 nominations, which were evaluated based on the following criteria: originality, promise and quality of the proposal; its potential impact on the field; the nominee’s qualifications; and plans to communicate findings to a broad audience.

]]>Rate of dementia on the decline—but beware of growing numbershttp://home.isr.umich.edu/releases/rate-dementia-decline-beware-growing-numbers/
Mon, 16 Apr 2018 15:07:17 +0000http://home.isr.umich.edu/?post_type=isr_news_releases&p=13722ANN ARBOR—The good news? The rate of older Americans with dementia is on the decline.

The bad news? The number of Americans 85 and older will roughly double in the next 20 years, so even with a decline in the rate of dementia among older adults, the number of people with dementia will likely increase substantially, says Robert Schoeni, a professor at the University of Michigan Institute for Social Research, Gerald R. Ford School of Public Policy and Department of Economics.

The impact on both those with dementia and the people who care for them is significant. More than 45 million people worldwide have dementia. Its economic impact, including unpaid care provided by families, is estimated to be about $800 billion annually, Schoeni says.

Schoeni and colleagues Vicki Freedman and Ken Langa have led a special supplement to the Journals of Gerontology, Series B: Psychological Sciences and Social Sciences that examines trends in dementia across the United States. The nine studies provide new evidence on whether dementia trends have been more favorable, and reasons for those trends.

“The overall favorable trend seems to be linked to higher education levels among today’s older Americans,” said Freedman, a research professor of the U-M Institute for Social Research. “But substantial gaps remain between more and less educated groups.”

The supplement stems from a May 2017 workshop funded by the National Institute on Aging that aimed to broaden the understanding of dementia trends, including a study that examines how education levels influence years expected to be lived with dementia.

Other studies look at the impact of cardiovascular disease on dementia. Reducing cardiovascular diseases and other chronic diseases is critical for the health of individuals and families, but because such advantages allow people to live to older ages when dementia is more common, the number of dementia cases may not decrease.

“By far the most powerful way to lower both the proportion and number of people with dementia is to develop prevention strategies and treatments that would directly delay the onset of dementia,” said Langa, a research professor of the U-M Institute for Social Research and Institute for Healthcare Policy and Innovation, professor of internal medicine and research scientist at the Veterans Affairs Ann Arbor Center for Clinical Management Research.

Together, the studies generated a number of cross-cutting themes. In addition to the overall decline in dementia prevalence, the supplement’s studies show the following:

Some groups of older adults in the U.S. are living fewer years with dementia.

Racial and socioeconomic disparities in dementia are large and not diminishing.

Rising levels of education partially account for the decline of dementia prevalence, but more research is needed to understand the role cardiovascular risk factors in trends of dementia.

Reducing the incidence of diabetes and hypertension in midlife will increase the future number of cases of dementia because people will live longer. Therefore, postponing the onset of dementia directly is the most effective way to further reduce the size of the population living with dementia.

ANN ARBOR—The Consumer Sentiment Index reached the highest level since 2004, and the Current Conditions Index set a new peak, dating back to the mid-1940s, according to the University of Michigan Surveys of Consumers.

Importantly, all of the March gain was among households with incomes in the bottom third; those in the middle third were unchanged, while the Index fell among households with incomes in the top third, said U-M economist Richard Curtin, director of the surveys.

Currently, the main factor driving discretionary spending is that consumers remain confident in their future job and income prospects, which is anchored more in the stability of these economic prospects rather than the size of the expected gains, Curtin said. Overall, the data are consistent with growth rate in personal consumption expenditures of 2.6 percent from mid-2018 to mid-2019.

“The consensus expectation among consumers is that interest rates will increase in the foreseeable future,” Curtin said. “While consumers view the current level of interest rates as still relatively low, they understand that interest rate hikes are intended to dampen the future pace of economic growth.Their reaction will both emphasize borrowing in advance of those expected increases as well as heighten their precautionary savings motives.

“The trade-off between spending and saving will crucially depend on the pace of future interest rate hikes compared with the pace of income growth. It is likely that income growth will initially dominate, tilting consumers’ motives more toward spending than saving.”

Record Financial Progress

Recent financial progress was reported by 57 percent of consumers in March, which tied the 1998 all-time peak. Half of all households cited higher incomes and nearly two-thirds cited rising home values. While these gains were widespread, future financial prospects improved among the lowest income households and declined among the highest-income households. Expected increases in nominal incomes during the year ahead fell to 1.7 percent in March, down from 2.3 percent last year, with most of the decline among households with incomes in the top third.

Economic News Weakens Outlook

Consumers reported more negative news about trade policies, with unfavorable references rising to 31 percent from last month’s 18 percent. While six-in-10 consumers reported that the overall economy had recently improved, half as many anticipated additional gains in the pace of economic growth during the year ahead. The remaining strength was among those with incomes in the bottom third, while losses were recorded among those with incomes in the top third. The same pattern held for expectations about future changes in the unemployment rate.

Consumer Sentiment Index

The Consumer Sentiment Index was 101.4 in the March 2018 survey, up from 99.7 in February and 96.9 in last March’s survey. The Current Conditions Index was 121.2 in March, up from 114.9 in February and last year’s 113.2, reaching the highest level ever recorded. The Expectations Index was 88.8 in March, between last month’s 90.0 and last year’s 86.5.

About the Surveys

The Surveys of Consumers is a rotating panel survey based on a nationally representative sample that gives each household in the coterminous U.S. an equal probability of being selected. Interviews are conducted throughout the month by telephone. The minimum monthly change required for significance at the 95-percent level in the Sentiment Index is 4.8 points; for Current and Expectations Index the minimum is 6 points.

During Love Data Week, ICPSR officially launched its new data dissemination system, complete with a launch webinar and great pre-launch video (below), streamed live on Facebook. Also, ICPSR hosted its first Data Story Contest, won by Rob O’Reilly, Data Services Librarian at Emory University, and Lynda Kellam, Data Services and Government Information Librarian at the University of North Carolina at Greensboro’s University Libraries.

Among highlights of Endangered Data Week were a webinar marking the one-year anniversary of DataLumos, ICPSR’s repository created in 2018 to preserve valuable government data. The webinar, “DataLumos: A Tool for Improving the Future Accessibility of Valuable Government Data,” is now viewable on YouTube. ICPSR finished out the week with a Save the Data with DataLumos event, described by Linda Detterman as “kind of like a telethon/hackathon — but for endangered data!!” The event yielded at least 20 new uploads to the DataLumos repository. See ICPSR’s David Bleckley and Johanna Bleckman talk about how to get involved in this fun Facebook Live video recording (below) from the event. Also, during Endangered Data Week, ICPSR’s Piper Simmons went live to share a story about a data-rescue-in-progress.

ANN ARBOR—Consumer sentiment has remained at very favorable levels for more than a year. In the February survey, it was just below the October 2017 peak of 100.7, the highest level since 2004, according to the University of Michigan Surveys of Consumers.

Consumers anticipated that the unemployment rate would dip below 4 percent in 2018, he said. Only modest gains in wages were anticipated, and inflation expectations have remained unchanged during the past few months. Overall, the data signal an expected gain of 2.9 percent in real personal consumption expenditures during 2018.

“Modest hikes in interest rates will not cause postponement of discretionary purchases as long as wages and take-home pay continue to rise,” Curtin said. “Personal tax cuts are crucial to spur additional spending, but unlike prior cuts that had an immediate positive impact, this tax cut has not generated universal support.

“Partisanship has greatly influenced perceptions of the tax cut legislation. When asked to identify recent economic changes, net positive references to the tax cuts were made by 37 percent of Republicans and by 22 percent of Independents, but among Democrats, net negative references were made by 4 percent. The partisan division is likely to last even after the cuts add to take-home pay and boost spending.”

Tax reforms and job gains dominate

More consumers reported that they had recently heard favorable news about recent economic developments in February than at any other time since 1984. Two-thirds of consumers reported changes in either tax policies or employment gains.

In the past two months, more consumers spontaneously mentioned favorable change in economic policies than has been recorded in more than a half century, Curtin said. Favorable assessments of the current job situation were joined by optimistic expectations for additional declines in unemployment during the year ahead. Few complained about interest rates, although they were expected to increase by the most consumers since 2006.

Gains in jobs, wages and after-tax pay

When asked to assess their financial situation, 54 percent of all consumers reported improved finances, the highest proportion since January 2000. Income gains of 2.2 percent were anticipated across all households, just below the 2017 peak of 2.3 percent—the highest since 2008. Among those under age 45, a median income increase of 4.2 percent was expected during the year ahead, which was also down from the 2017 peak of 4.8 percent.

Consumers do not anticipate a surge in the inflation rate anytime soon, Curtin said. When asked to explain their financial situation in the February survey, the fewest consumers in decades cited rising prices as a cause for declining living standards.

Consumer Sentiment Index

The Consumer Sentiment Index was 99.7 in the February 2018 survey, up from 95.7 in January and 96.3 in February 2017. The Current Conditions Index was 114.9 in February, up from 110.5 in January and 111.5 last February. The Expectations
Index was 90.0 in February, up from 86.3 in January and last year’s 86.5.

About the Surveys

The Surveys of Consumers is a rotating panel survey based on a nationally representative sample that gives each household in the coterminous U.S. an equal probability of being selected. Interviews are conducted throughout the month by telephone. The minimum monthly change required for significance at the 95-percent level in the Sentiment Index is 4.8 points; for Current and Expectations Index the minimum is 6 points.

There’s a difference between discrimination and vigilance, says Margaret Hicken, director of the U-M RacismLab. Discrimination entails day-to-day instances of prejudice whereas vigilance is a never-ending, daily anticipation of discrimination or prejudice.

“Because you know or have heard of Trayvon Martin, you know when you go out, you need to make sure that you are not wearing a hoodie or that you don’t walk in certain areas,” said Hicken, also a research assistant professor at the U-M Institute for Social Research Survey Research Center. “Similarly, you have heard of friends or family who have been pulled over for traffic stops, so you know when you go out driving, your tags have to be up to date, or that you have your license on the seat and you don’t have to reach into the glove compartment.”

Using data from the Chicago Community Adult Health Study which surveyed 3,105 adults age 18 and older, Hicken and her fellow researchers examined the levels of discrimination and vigilance among black and white women, and how those measures correlated to body mass index and waist circumference. Waist circumference in particular, the researchers say, is an important risk factor for chronic diseases such as cardiovascular disease and diabetes.

Thirty percent of black women reported high levels of vigilance, while 9 percent of white women did. Black women also reported the highest level of discrimination, with 7 percent of black women and 2 percent of white women reporting high rates of discrimination.

When the researchers looked at the women as a single group, discrimination stood out as an important stressor. Both black and white women in the high discrimination category showed a waist circumference 7.2 centimeters greater than those in the no-discrimination category.

But when the researchers divided the group by race, they found that vigilance and discrimination affected the women differently. White women showed no association between vigilance and waist circumference, but those who reported discrimination showed a waist circumference 11 centimeters greater than those who reported no discrimination.

In black women, the opposite was true. Discrimination had no effect on waist circumference, but vigilance did. Those who reported the highest levels of vigilance showed a 3.9 centimeter greater waist circumference than those in the no-vigilance category, and the women who reported low levels of vigilance showed a 6.1 centimeter greater waist circumference.

But why the effect in particular on waist circumference? Previous research has shown that chronic stress may play an important role in obesity inequalities. Some research shows that eating high-calorie, high-saturated fat foods in response to stress results in the release of chemicals that reduce feelings of stress. Psychosocial stress also alters metabolism, which changes the way fat is deposited in the body—often concentrating it around the middle.

“If we live in a society where one group is stigmatized so that you have to take these preventive measures chronically, differences in the way these groups of women internalize discrimination and vigilance become apparent,” Hicken said.

There are only a handful of studies that examine how psychosocial stress and racial inequality impact obesity or other weight-related measures of health, say the study’s authors.

Next, the researchers plan to study how vigilance affects immigrant communities, including North African and Muslim Americans as well as Latino immigrants.